Iluka Says 2013 Zircon Sales to Top Production on China Demand

By David Stringer -
Jul 16, 2013

Iluka Resources Ltd. (ILU), the world’s
biggest zircon producer, said sales will exceed production this
year amid strong demand in China and North America, and on signs
of a recovery in Europe’s ceramics sector.

The Perth-based producer, one of the 10 best performers
this year on the S&P/ASX index of 52 resources companies, said
sales of zircon, a mineral used to glaze ceramic tiles, rose 143
percent to 210,900 metric tons in the year to June 30, compared
with the same period a year ago.

The producer, which raised its 2013 zircon production
forecast to 280,000 metric tons from 220,000 tons, “continues
to expect that zircon sales in 2013 will exceed production,” it
said today in a statement.

While it said a rise in demand in China for tiles and other
ceramic products had reflected an increase in floor space starts
and real estate loans compared with 2012, Iluka said that a
cooling in growth in the country could see the trend reverse.
Growth in China, the biggest zircon consumer, slowed for a
second quarter to 7.5 percent in April-to-June, a June 15
National Bureau of Statistics report showed.

Ceramics Demand

An increase in demand in the European ceramics sector could
also be fragile, the producer said.

“Iluka remains of the view that forecasting demand for
both zircon and titanium dioxide remains challenging, due to
factors such as the volatility of global and regional economic
performance and associated business confidence levels,” the
company said in its statement.

“The key challenge for Iluka is how to position the
business for the growth in the Chinese market,” Citigroup Inc.
analysts led by Clarke Williams said in a July 15 note.

Revenue from sales of mineral sands in the three months
ended June 30 was A$241.8 million ($223 million) compared with
A$466.5 million a year earlier, amid weaker global demand for
rutile and synthetic rutile, the company said.

Sales of rutile fell 34 percent to 56,300 metric tons in
the year to June 30 compared with the previous year, while sales
of synthetic rutile slumped 80 percent to 20,000 tons over the
same period. Iluka cut its forecast of total rutile and
synthetic rutile sales in 2013 to 200,000 tons from 275,000
tons, it said.

Zircon prices stabilized in the six months to June 30 and
had “increased slightly towards the end of the half,” Iluka
said. CIMB Group Holdings Bhd. (CIMB) analysts led by Michael Evans
forecast zircon at an average price of $1,263 per ton in 2013 in
a note to clients dated May 27.